Big 3 banks suffer YoY declines in non-interest income in Q122

UOB posted the biggest decline at 30%.

Singapore's big three banks, OCBC, UOB, and DBS, all suffered a year-on-year (YoY) decline in their respective non-interest incomes (NII) in Q1 2022.

Amongst the three, UOB posted the biggest decline, with its non-interest income dropping 30% YoY to $673m from $957m in Q1 2021.

Maybank, in its report, said UOB was affected by " hedging impacts on their credit holdings as well as mark-to-market losses on equities."

With the decline, the analyst lowered its   2022-24 non-interest income estimate for UOB by 5% to 6%.

Behind UOB is OCBC which posted a 23% YoY drop in its non-interest income to 1.140b from 1.143b, meanwhile, DBS' NII fell 10.7% to $1.56b.

Maybank said the YoY declines in the big three's non-interest income were "largely from a high base effect of 1Q21 fee income."

Despite declines in their non-interest income in Q1 2022, the big three all saw an uptick in their respective net interest income (NII) for the first time in four quarters, led by UOB which saw a 10% increase, followed by OCBC (4%), and DBS (3.8%). 

Meanwhile, loan growth was at 8-9% YoY in Q1 2022, which Maybank said points to "regional recovery."

"Rising rates should provide asset-repricing upside across the portfolio, especially with 56-76% of deposits in CASA. Further, 20-25% of loans are in USD – largely funded by USD CASA. This means Fed rate hikes should directly flow through to improving spreads here," the analyst added.